Best candlestick patterns: morning star candlestick pattern

The morning star (along with the evening star) candlestick pattern is one of the most powerful reversal signs on a chart. Yet – if you looked at a text-book example of them – you’d think they rarely pop up.

In reality, these are littered all over price behaviour. You just need to know how to spot them in the real world …

With that said, I’m going to start off with the text-book version …

What a morning star candlestick pattern should look like

The morning star pattern is a three-candlestick set-up, consisting of a long down candle, followed by a doji, and then a long up candle. Characteristics we look for include:

• long bodies in the first and third candles,
• a short body in the second candle,
• a gap down between candles 1 &2,
• a gap up between candles 2 & 3, and
• the up candle closing higher than our first candlestick opened

What a morning star candlestick pattern means

A morning star pattern is a bullish reversal, showing that buyers are taking control of the price. The longer the bodies of the first and third candles, the more significant the pattern is, especially if we have the third candlestick closing higher than the level the pattern starts at.

If we get gapping to the ‘star’ doji candle, then that adds further weight to the set-up.

So what do morning star candlestick patterns really look like?

Go looking for all the features on our morning-star wishlist, and you could find yourself waiting a long time.

Instead, I want to show you what genuine, useful morning star patterns look like.

Here’s a very average snapshot of a trading day …

There may be no text-book morning-star candlesticks, but there are plenty of imperfect set-ups.

The candlesticks at ‘A’, may lack a large down candle to start the move, but looking at the previous candlestick, there’s a clear strong move down. It also has minimal gapping between candle bodies 2 & 3.

Likewise, at B and C, we have ‘messy’ morning stars.

And here’s another example I was able to use to my advantage just this morning on the GBPJPY 5-minute chart …

What’s key is the move down, the doji, and the move up. Everything else – the gap, the relative candle body sizes – just adds to the strength of the signal.

The closer we are to text-book, the stronger this is as a bullish reversal signal. But when reading candlesticks, it’s always important to remember that even perfect examples aren’t a guarantee of success.

Don’t expect your signals to be perfect, but equally, never expect them to yield perfect results!

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